The “Football Leaks” focus shifts to clubs with Middle Eastern owners
Ongoing controversy continues to surround the “Beautiful Game” as some 70 million documents (3.4 terabytes of data), remain the subject of investigation by journalists from members of European Investigative Collaborations (EIC).
The current report of the investigation relates to possible financial fraud in relation to the Financial Fair Play rule of the Union of European Football Associations (UEFA). This rule, approved in 2010, aims to prevent professional football clubs from spending more than they earn in the pursuit of success. The aim is to prevent clubs from doing this and then getting into financial difficulties that could endanger their long-term survival.
In December 2016 findings from the first files disclosed how some of football’s most prominent figures, including Cristiano Ronaldo and José Mourinho, avoided tax on some earnings through their use of offshore accounts. Since then, both European and national regulators have been questioning representatives of European football bodies about their tax structures.
The latest information released concentrates on the activities of Middle Eastern individuals and organisations who have become increasingly influential in football. So far they have focused on Manchester City, owned by Sheikh Mansour, deputy-prime minister of the UAE, and Paris St Germain, which belongs to Qatar Sports Investments.
The documents raise questions about the arrangements between these clubs and the football authorities regarding sponsorship deals and Financial Fair Play. They suggest the authorities may have dealt unevenly with the application of the sport’s rules, making it difficult for club owners to navigate these already complex regulations.
The investigators say that they will also be turning the spotlight on tax avoidance arrangements entered into by clubs and players.
JHA is a leading authority in contentious tax and commercial litigation, having achieved Band One rankings in both Legal 500 and Chambers & Partners for the fifth consecutive year. A significant part of its practice is devoted to football-related tax disputes involving clubs, players and agents.
Reports on the investigation can be found in DER SPIEGEL and Reuters.
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Increased Investment in Personal Tax Compliance in the UK (Published in Thought Leaders 4 Private Client)
Advances in technology and increased international fiscal co-operation have made global personal tax compliance initiatives pop up in abundance in recent years. To compound the issue, the Russian invasion of Ukraine and the corresponding economic fallout prompted domestic governments to increase transparency in relation to investments held by wealthy foreign individuals (with a focus on oligarchs).
In the UK, in the context of the cost-of-living crisis, public opinion certainly seems to be in favour of increased accountability for high-net-worth individuals (eg, on 9 October 2022, 63% of Britons surveyed thought that “the rich are not paying enough and their taxes should be increased”).1
HMRC is one of the most sophisticated tax collection authorities in the world and the department is making significant investments in technology in the field of compliance work; they are well placed to take advantage of new international efforts to increase tax compliance, particularly considering the already extensive network of 130 bilateral tax treaties in the UK (the largest in the world).2 The UK was also a founding member of the OECD’s Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) forum.
This article discusses the main developments in support of the increased focus on international transparency and personal tax compliance in the UK. There are other international fiscal initiatives, particularly in the field of corporate taxation, but such initiatives are beyond the scope of this article.
It should be noted that a somewhat piecemeal approach, with constant tinkering makes compliance difficult for the taxpayer and is often criticised for lacking the certainty that a stable tax system needs to thrive.
This article was first published with ThoughtLeaders4 Private Client Magazine
